Online Shopping Affecting Retail Employment

The overall employment picture is not all bad. While department stores have been shedding jobs, other segments of the retail sector have posted steady to rising job counts. Moreover, as noted above, much of this churn is just a shift of jobs from one industry to another: over the past year, nonstore retailers have added almost as many jobs (29,000) as department stores have cut (32,000). So why should this be a concern? One reason is that the geographic distribution of jobs is very different for online retailers versus brick-and-mortar outfits. In other words, areas that are losing a lot of department store jobs may not be the ones gaining online retail jobs.
Department stores have an incentive to spread out their staff in proportion with the distribution of the general population: because they do their business in person and there is demand for their products throughout the country, they employ people everywhere.
Online retailers don’t have the same geographic constraints—that is, they don’t have to be where their customers are to make a transaction. In this sense, they are more like wholesale distributors. In contrast with traditional retailers, online sellers tend to concentrate all or most of their staff in one or a few locations: it is more expensive to have people all over the place if they don’t need to be. Although the largest online retailers do have multiple distribution centers around the country, they still tend to have considerably fewer locations than the largest department store chains. Though total employment across department stores and e-tailers combined has not changed much at the national level since late 2012, there have been significant differences across counties: the areas that are losing department store jobs are often not the same ones gaining nonstore jobs.
To examine these trends more closely, we looked at local employment data across the fifty states, as well as in Washington, D.C., and Puerto Rico. We were able to analyze detailed retail industry employment data for roughly 700 counties, areas that account for 82 percent of jobs nationwide. Such data are not available for more than 2,000 rural counties, however; to include those areas in our analysis, we have combined statistics on rural counties by state. In New York, for example, we had detailed data for only thirty-five of the state’s sixty-two counties, so we combined the other twenty-seven into one area, which we can think of as a really big, sparsely populated county. When these amalgamations are added in, we have a nationwide data set spanning 742 “counties” (as we will call them for simplicity). Between 2012 and 2016, 561 (about 75 percent) of the counties we studied lost department store jobs. While a majority of those counties did see some increase in nonstore retail jobs, four-fifths of these counties lost out on net—that is, department stores shed more jobs than nonstore retailers added. Of those counties that came out ahead—that is, gained more in nonstore retail jobs than they lost in department store jobs—some came out way ahead: none did better than King County, Washington, home of Amazon.com. In 2012, King County’s nonstore employment represented 1.4 percent of the total employment in the county; by 2016, that share had doubled to 2.8 percent. This seems especially remarkable since, at the national level, nonstore retail jobs had merely edged up from 0.4 percent of total employment to 0.5 percent during the same period.
But simple job counts are not the only relevant measure of labor market conditions. How do the jobs being lost at department stores compare to those being gained in online retailing? For people who lose department store jobs, is finding a new job simply a matter of relocating to areas where there are lots of nonstore job openings?